I’m a London-based freelance journalist who specializes in all aspects of technology including investigations, comment and news. I write for The Guardian, Independent, Evening Standard, TechRadar, New Scientist and others. Follow me on Twitter @_JayMcgregor or on Google+

App Raises $1M In Funding For Simply Sending The Message 'Yo' Back And Forth

The hallmark of a bubble about to burst is a heightening in mania right before it all hits the fan. Say, for example, investors driving through Silicon Valley throwing bags of money out of a car window and watching penniless entrepreneurs scramble for cash to fund their do-nothing app.

Allow me to introduce you to new chat app, Yo.

You may have heard of it recently, it has been dominating headlines over the last 24 hours for two reasons. Firstly, its simplicity. The app allows you to message friends with the word “Yo” and that’s it. Nothing else can be said other than sending this innocuous greeting.

Secondly, it has just raised $1m in seed funding from CEO of Mobli, Moshe Hogeg’s angel fund. Yes, an app that simply sends a “Yo” notification to friends has managed to pry $1m in cold hard cash out of an investor’s hands.

The founder Or Abel told the Financial Times that he coded the app in eight hours, after being asked by his then boss Moshe Hogeg, to make a notification app that could summon his secretary. After testing the app on colleagues who apparently loved it, Abel then moved to San Francisco to pursue the Yo app venture full-time.

After an under-the-radar launch on the iOS store, 50,000 users have signed up and four million messages have been sent, 2 million of which were in the last month. That’s four million messages, 1 million in funding, 50,000 users and $0 revenue.

Heading for a crash?

The signs are all there. Mass amounts of investment money are being pumped into companies that either don’t do much, or don’t actually make any money themselves. The sums seems to be getting bigger and bigger too.

Facebook bought WhatsApp for $19 billion, it paid $1 billion for Instagram and offered $3 billion for Snapchat. Those are astronomical figures for companies that, at the time, had little or no revenue streams.

Companies with small revenue streams are valued at ludicrously high amounts, too. Take Pinterest, for example. A great company with an exciting project, but is it really worth $5 billion? Investors who have pumped three quarters of a billion into the company seem to think so.

Anecdotally, a developer friend of mine told me that he went to an interview at a startup and was asked by the founders nothing but non technical questions. One being: “When it comes to development, how do you rate yourself out of 10”. This was for a contract job paying £450 a day.

I spoke to Cryptocat founder Nadim Kobeissi, who explained to me why he thinks we’re heading towards a crash: “My thoughts are pretty simple, really. People are so blinded by the big money in social media apps that they’re throwing absurd sums at things like Yo that can be programmed in literally a single day’s work by a novice programmer. It’s worrisome and it devalues the entire field.

“I worry that the current trend is so fraught with over-valuations and unreasonable investment of pretentious initiatives that we may soon wake up and realize that way too much of this money has gone down the drain — and that the entire tech community has lost the faith of many investment resources as a result.”

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